The Lincoln Institute provides a variety of early- and mid-career research and fellowship opportunities. In this series, we follow up with past participants to learn more about their work.

Ryan M. Gallagher is an urban economist. But his latest research is increasingly concerned with areas outside the city—because in modern America, that’s where so much of the action has taken place. “Central cities are interesting, don’t get me wrong. But they already tend to be the focus of a lot of research,” says Gallagher, an associate professor of economics at Northeastern Illinois University. “And if you look at postwar America, most of the growth was in suburbia.”

Gallagher, who earned his PhD in economics from the University of Illinois Chicago, was awarded a David C. Lincoln Fellowship in 2015. The program supports scholars and practitioners conducting new research on land value taxation and its applications.

In this interview, which has been edited for length and clarity, Gallagher shares what he’s learned about the evolution of suburban zoning, explains why urban economics is more relevant to people’s lives than they tend to realize, and ponders whether urban housing markets in Northern Ireland are still impacted by the legacy of decades of conflict.

JON GOREY: You’re an applied microeconomist—can you explain how that differs from macroeconomics?

RYAN GALLAGHER: This is what I tell my students: Microeconomics deals with the economic implications of individual behaviors, or the incentives that drive individual economic behaviors. Whereas macroeconomics deals more with economic aggregates—inflation, recession, economic growth, the unemployment rate. I’m an urban economist, so we deal with how we allocate scarce collective resources across space, and what the implications of that might be. Some of the work that I’ve done in the past is on the impact of house size or zoning regulations on the fiscal viability of properties from a local public finance perspective—and that all kind of falls within the realm of microeconomics, because you’re talking about the incentives that local home builders face, and what the implications are for local public decision-makers. That’s all microeconomics, because we’re talking about how folks behave in response to environmental changes.

JG: What was the focus of your Lincoln Institute fellowship?

RG: I had been doing a little bit of research, with colleagues at Howard University and the University of Illinois Chicago, looking into the role that households without children play in redistributing resources within a public education system funded by property taxes. And we showed reasonably that education property taxes can be quite redistributive away from folks who don’t have children and towards folks who do have children within a local school district. . . . And that got me thinking about home size. Because historically, going back to the ’70s and the Tiebout model, there’s this belief, at least in economics, that small homes were kind of a fiscal burden on municipalities, based on the logic that they have less value and generate less tax revenue. And what I was trying to investigate was that, wait, folks in small homes probably have fewer kids, or they’re just smaller households in general. So I started looking at the value per person that a property generates. And my preliminary evidence suggested that small homes and apartments, as an aggregate group, actually had a higher per capita value, which suggested that the logic was actually flipped—that smaller dwellings, on average, were a fiscal boon to these property tax–funded systems, that maybe we’ve been approaching this problem all wrong.

The Lincoln Institute fellowship supported two published papers, one on small homes in general, and then I transitioned to looking at the implications of zoning laws. Do communities that are overly restrictive with their lot sizes—meaning they require large lot sizes, and as a consequence they prevent small homes and apartments—find themselves at a fiscal disadvantage, are they shooting themselves in the foot? A lot of folks that live in apartments and small dwellings are single people, or couples without kids, or elderly folks. They’re putting a lot of property tax money into the system and not drawing a lot out.

So I investigated zoning laws in Massachusetts . . . looking across space to see whether there was a big jump across boundaries in property tax value per person as zoning laws became more or less restrictive. And I showed in the second paper that within a municipality in Massachusetts, as you cross a zoning boundary from an area that’s more to less restrictive, you would see a higher property tax base on a per capita basis in the less restrictive area.

JG: What have you been working on lately, and what are you interested in working on next?

RG: Something that’s really missing from the literature, both for planners and for economists alike, is a detailed, digitized historical archive of the evolution of land use zoning over time within suburbia. So for Cook County—that’s where Chicago is, it’s the second-largest county population-wise in the country, and we have an immense number of municipalities—I started to digitize the history of each suburb’s zoning ordinance over time, starting in 1940.

It’s been a massive undertaking, and I was able to digitize most of the evolution of the suburban zoning environment for Cook County from 1940 to 1950 to 1960. Then I teamed up with Allison Shertzer, who’s now at the Philadelphia Fed, and Tate Twinam, who’s at William and Mary, and we’re now pushing this digitization project into 1970. We’re looking at how zoning laws impacted urban form within suburbia, and the built environment in particular—what would things have looked like if there hadn’t been zoning? And this is really, really tricky, because the role that real estate developers play is oftentimes overlooked.

We’re focusing on the evolution of minimum lot sizes. But the lot size is put in place when the land is platted, not when the home is built. This is really important, because zoning laws might very well just follow the preexisting built environment, and that makes a lot of sense. I mean, if I’m a city planner or a city councilor, and I’m thinking about passing a zoning ordinance, I’m going to say, ‘Okay, well, we should probably follow what’s already there.’ So in that case, it’s not really zoning that’s having the impact on the built environment, it’s the opposite: It’s the built environment that preexisted zoning that’s really impacting zoning and future building projects.

I’ve got some other projects that are looking at municipal formation and annexation. I’m tracking the value of a parcel of land every year from 1946 to 1969 across suburban Cook County for multiple parcels, and I’m looking at how the value responds to being annexed by a local municipality. It’s all very preliminary, but I’m finding that when land is incorporated into a taxing body, that has a huge impact on the land’s value.

I’ve got another paper that I’m working on with someone from the University of Illinois, on the role of newly incorporated suburbs, and what role they play in the fiscal fabric of a metropolitan area. . . .

What we’re finding—this is very preliminary—is that the newer suburbs tend to tax far, far less than the older suburbs do, and they provide, as a consequence, fewer services . . . and in that respect, they provide an option for folks that are looking for that type of a lifestyle. If you go to a lot of these suburbs, they don’t have sidewalks . . . it’s a low-cost, low-service environment. Maybe they have a library, maybe they don’t. I think the role of these newer incorporated towns and cities, especially on the urban fringe, is underexplored and worth investigating.

JG: What’s the most surprising thing you’ve found in your research?

RG: One thing that surprised me is how busy our inner-ring suburbs have been, and how strategic they’ve been, at building out their borders. . . . It’s not big tracts of land, it’s more a question of, ‘Should we annex this lot versus that lot?’ So I was fascinated by how much nuance there was and how much intricate detail and surveying work is involved behind the scenes in urban growth. I’ve really gained an appreciation for all the local public servants who are in charge of maintaining all this.

When we look at urban growth, the role that private, profit-motivated real estate developers play in growing the metropolitan area and determining its built environment has also surprised me. Sifting through all these plats, you really see how each subdivider had their own vision. If you drive through some suburban neighborhood or community that has sprawled, if you really pay attention, you can see where one subdivision stopped and where a different subdivider picked up, because the homes are maybe a little bit smaller, a little bit bigger . . . there are these invisible boundaries that most of us probably don’t pay attention to. You’ll see huge class differences across these boundaries. These aren’t zoning boundaries, these aren’t political boundaries. But you can see the change in the demographic, how that impacted the urban landscape, spatially speaking, and that’s fascinating.

JG: What do you wish more people knew about urban economics?

RG: Zoning, in particular, has been very topical for the last decade, and urban economists have been interviewed a bit more in the press in response to that. As well as the pandemic, and the move to Zoom, where people were like, ‘Are cities just going to disappear?’ These are the two areas where I’ve seen urban economics really make it into the popular press in my lifetime. But we do so much more. I think the research and work being done by urban economists—and local public finance folks are included in that category—is really important to how a lot of us live.

Macroeconomists are always being interviewed about interest rates and money supply and recessions and depressions, and that’s all important stuff, of course. But I think what we do as urban economists—and I get that a lot of it’s kind of high-minded, academic ivory tower stuff—the questions that we’re asking, and the problems that we’re trying to help solve, probably have a more direct impact on the lives of the average urban resident, on their quality of life. I think if people paid more attention to what we’re doing and the problems that we’re trying to investigate, they would find that this is a very, very fruitful and impactful area of research.

JG: What’s the best book you’ve read lately?

Two books I’ve read recently that were quite good are Blanketmen: An Untold Story of the H-Block Hunger Strike, and We Don’t Know Ourselves. Both are about Irish history. I’m not sure how comfortable everyone would be reading the first book, but I enjoyed it. Anyone who studies the conflict in Northern Ireland would find it very interesting, but I recognize that the subject matter is controversial.

To tie this back to urban economics, I’m really interested in what impact, if any, the physical barriers in cities like Belfast and Derry have had on urban economy and growth. They don’t fight the way they used to, of course, but there’s still discomfort. And so the question is, you’ve got a growing Catholic population on one side, you’ve got a relatively stagnant, give or take, more Protestant population on the other side of these barriers, and if they’re unwilling to live amongst one another, what does that do to housing price pressures? If there’s available housing on the Protestant side for this growing Catholic population, but they’re unwilling to live there, does that put more pressure on housing prices on the Catholic side?

Now, these are just ideas, it’s been hard to get data on stuff like this. But I’m a Gallagher, my mom’s and my dad’s families both came from the north, so it’s kind of a passion project. I think it’d be really interesting if someone could show what the implications are for these relatively firm neighborhood boundaries.

Jon Gorey is a staff writer at the Lincoln Institute of Land Policy.

Lead image: Urban economist Ryan Gallagher. Credit: Courtesy photo.

This annual report documents the wide range of property tax rates in more than 100 US cities and helps explain why they vary so widely.

The Lincoln Institute of Land Policy, in collaboration with the Minnesota Center for Fiscal Excellence, announced the release of its newest 50-State Property Tax Comparison Study for taxes paid in 2023.

The new report estimates the effect of assessment limits that cap annual growth in the assessed value of individual properties and shows how they create large disparities in effective tax rates for owners of similarly valued homes. These limits shift the tax burden away from long-time homeowners and toward owners who recently purchased homes.

The largest disparity evidenced in the report is in Miami, where someone who just purchased a median-valued home would pay nearly three times more than someone who purchased an identical home 12 years ago—the average length of ownership there—despite both homes having an identical value in 2023. The new homeowner would pay $9,205, compared to $3,104 for the long-time owner. In six other cities a newly purchased median-valued home would face an effective tax rate at least twice as high as the rate for an equivalently valued home owned for the average duration in the city. Thirty large cities in the report have assessment limits, and the policy shifts the tax burden to new homeowners in all of them.

“The tax disparities from assessment limits are increasingly a barrier to homeownership,” said Adam H. Langley, associate director of tax policy at the Lincoln Institute. “The added property tax burden placed on new homeowners comes on top of sharp increases in mortgage costs in recent years. Assessment limits also make existing owners less likely to move if it would mean giving up tax savings accrued under those limits, which further constrains the supply of entry-level homes available for purchase and drives up prices.”

In addition to highlighting disparities created by assessment limits, this report provides the most meaningful data available to compare cities’ property taxes by calculating the effective tax rate: the tax bill as a percentage of a property’s market value. Data are available for 74 large US cities and a rural municipality in each state, with information on four different property types (homestead, commercial, industrial, and apartment properties), and statistics on both net tax bills (i.e., $3,000) and effective tax rates (i.e., 1.5 percent).

The study found that the average effective tax rate on a median-valued homestead was 1.29 percent in 2023 for the largest city in each state, with Detroit, Newark, Bridgeport (CT), and Aurora* (IL) all having effective tax rates at least twice the average. Conversely, eight cities have tax rates that are half the study average or less, led by Honolulu, Charleston (SC), Boston, Salt Lake City, and Denver. The average effective tax rate for this group of large cities fell 2.5 percent between 2022 and 2023—from 1.32 percent to 1.29 percent—and nearly twice as many cities had decreases (33) than increases (17).

Highest and Lowest Effective Property Tax Rates on a Median–Valued Home (2023) 

Commercial property tax rates on office buildings and similar properties also vary significantly across cities. The effective tax rate on a $1 million commercial property averaged 1.81 percent across the largest cities in each state. The highest rates are in Detroit and Chicago, where rates are more than twice the average for this group of cities. Rates are less than half that average in Cheyenne (WY), Charlotte, Seattle, Boise, and Wilmington (DE). The average commercial tax rate for the 53 cities fell 1.5 percent between 2022 and 2023, with declines in 30 cities.

Highest and Lowest Effective Property Tax Rates on $1 Million Commercial Property

The Lincoln Institute provides more evidence on assessment limits in the Policy Focus Report on Property Tax Assessment Limits, and highlights better approaches to property tax relief in Policy Focus Reports on Property Tax Relief for Homeowners and Rethinking the Property Tax–School Funding Dilemma.

The 50-State Property Tax Comparison Study is available for download on the Lincoln Institute website.

Lead image: Residential homes in Key West, Florida. Credit: Lisa-Blue via iStock/Getty Images Plus.

A recent study from the Lancet found that by the start of the next century, more than half of all births will occur in sub-Saharan Africa. Thanks to higher fertility rates and longer life expectancies, the continent’s population is on track to nearly double to 2.4 billion by 2050, then nearly double again, to 4.2 billion by 2100.

Within Africa, intermediary cities (noncapital cities, typically with a population of 1 million or fewer) are the fastest growing urban places. Between 2022 and 2030, intermediary cities are expected to account for nearly 50 percent of Africa’s overall urban population growth, and this growth will occur largely in cities that currently have fewer than 1 million people. For example, Zinder, the third-largest city in Niger, is expected to more than double its population between 2020 and 2035, growing from about a half-million to over 1 million residents.

The implications of this tremendous growth for people, communities, economies, and the environment are extraordinary, made even more complex by the impacts of climate change and climate migration.

A recent collaboration between the Lincoln Institute of Land Policy and Challenge Works investigated ways to support effective land use planning, infrastructure investments, land-based financing, and disaster resilience in rapidly growing intermediary cities in Africa. We used a mixed-methods approach that synthesizes literature reviews, interviews with urban policy experts and city officials, and specialist workshops.

We explored:

• the main goals of intermediary cities in Africa when it comes to managing growth;
• the barriers preventing such cities from using data-driven planning, mapping, and land-based financing tools; and
• how a challenge prize could accelerate the creation and scaling of such tools.

Below, we summarize some of the things we learned, and how we plan to take the idea of a challenge prize forward.

Growth is not inherently bad—but can have unintended consequences if not managed.

Often, with population growth comes economic opportunity and improved quality of life. More and better jobs, more economic mobility, and better access to health care, education, and sanitation are among the benefits of population growth.

However, we wanted to dig into questions of land use and infrastructure development knowing that:

• climate vulnerability risks are highest in rapidly growing cities;
• climate change will disproportionately impact people in rapidly urbanizing countries, particularly groups that are already vulnerable;
• the cost of retrofitting infrastructure in informal settlements is three times more expensive than new infrastructure development; and
• with two-thirds of African cities yet to be built, a small window of opportunity exists to make the necessary investments to support future growth patterns based on sustainable and equitable development principles.

Land use planning in intermediary cities is critical to creating more sustainable futures.

In speaking with city leaders and experts within government, NGOs, and industry working in this space, we learned that land use planning has different inputs, outputs, and outcomes. When these are integrated, a virtuous cycle can occur:

• cities can use evidence and insights to inform plans and policies;
• evidence-based, implementable plans that are created with input from diverse stakeholders are more likely to be enforced and lead to better outcomes; and
• this increases the level of trust and evidence available to inform new plans and policies.

The enabling ecosystem—which includes elements like institutional capacity to develop and implement plans, political dynamics, human capacity and skills, funding, cultural norms, and more—also plays an important role in creating and implementing land use plans (or conversely, limiting or obstructing progress).

We also learned that the loop can become ineffective for a number of reasons, which are generally attributed to two primary gaps: first, when effective, evidence-based land use plans are not created, due to organizational barriers (things like internal government silos or lack of planning capacity), political and economic barriers (things like political cycles and competition for resources), and technical barriers (such as lack of quality, up-to-date data); and second, when completed land use plans are not implemented, again due to organizational barriers (like complex land tenure), political and economic barriers (limited authority or resource to implement plans), and technical barriers (lack of local buy-in or weak enforcement powers).

Innovation has the potential to both address pain points within those gaps and strengthen the enabling ecosystem.

For example, we’ve identified city-specific use cases to create context-sensitive solutions that use data analytics to better plan for future mobility needs and transport infrastructure, or to better predict climate risk vulnerabilities and therefore inform land use regulations; apply crowdsourced data and citizen-sensing techniques to create and implement inclusive, equitable land use plans; or examine and collate property registration and valuations to bolster municipal finances and the use of land-based financial tools.

At the ecosystem level, creating new tools or adapting tools to the local context can help organizations leapfrog over traditional planning systems and catalyze new practices, and bring together government agencies or organizations that would not normally collaborate.

Tech solutions can help—but need to be paired with institutional enablers.

While our investigations confirmed the exciting potential for data-driven, digital technologies to help city leaders reduce risk and make more informed decisions, we also learned that new data collection and analysis tools are only as good as the planning and implementation processes they inform. Data-driven tools need to be developed in ways that are people-centered, inclusive, and fair, and are ineffective if they aren’t supported by an enabling ecosystem to implement and update effective plans.

Solutions that pair technical innovation with institutional innovation will enable intermediary cities in Africa to pioneer methods to manage growth in ways that are contextually appropriate and don’t yet exist.

A challenge prize can help spark and scale up solutions.

We propose to run an open innovation challenge in partnership with rapidly growing African intermediary cities. Such a challenge would invite innovators to create, test, and scale solutions to manage rapid growth. The challenge structure is based on partnering with cities to create an open call to innovators, oriented around a specific city use case, which will then work closely with city stakeholders to create custom, locally relevant solutions.

The challenge will include these fundamental features:

• Centering the challenge around opportunities cities want to address. Innovators will respond to challenge statements that reflect the goals cities want to achieve. This is different from, and complementary to, innovation funding approaches that focus on specific technologies or methods.
• Prioritizing scalable and replicable solutions. Our research revealed a number of promising innovations that are already being piloted and implemented in real-world settings. Despite this, scaling solutions remains a barrier. For instance, innovators who have the right data analytics solution may not have access to the permissions needed to test it in the real world, or the relationships to introduce it in places that need innovation. Local governments may not be prepared to adopt and maintain services. The challenge will be designed to address scaling barriers through seed funding, capacity-building, new business models, and access to customers, investors, and networks.
• Providing appropriate incentives and support for innovators to experiment and take risks. The outcome-based, stage-gated funding model of an innovation challenge means that innovators can experiment, while cities can benefit from crowding in a variety of ideas and expertise. Having access to both financial and nonfinancial support enables innovators to develop solutions in ways they might not be able to otherwise.
• Shaping and accelerating innovation in land use planning. By supporting multiple innovators working across multiple use cases and settings, the challenge can accelerate progress in the field of land use planning, as well as steer innovation in a direction more attuned to the needs of rapidly growing cities in low- and middle-income countries.

The time is now.

Africa is both the cradle of civilization and the world’s youngest continent, with half the population under the age of 19. The continent is also facing critical risks related to climate change and associated implications to disaster resilience, food and water security, energy supplies, and more. To ensure that future city growth in Africa is inclusive, equitable, sustainable, and resilient to changing conditions, we urgently need to take action now to accelerate and scale new models to manage growth. Our next steps are to assemble the partners to implement the next stage of the challenge. If you are interested in contributing, get in touch!

With sincere thanks to Stefan Chavez-Norgaard, Teodora Chis, Astrid Haas, Peter Oborn, and the many policy experts, development practitioners, city officials, tech innovators, and others who provided their insights and experiences to shape this program.

Lead image: City market street in Lagos, Nigeria, West Africa. Credit: peeterv via iStock/Getty Images Plus.